What is the maximum loss to this strategy

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Consider following strategy: Write both a put and a call on Tesla stock with strike prices of $35. The price of the call and put are $3 and $5 respectively. (a) Draw the payoff diagram for this strategy. (b) Draw the profit diagram for this strategy. (c) For what range of prices does this strategy make a profit. (d) What is the maximum loss to this strategy? (e) “You employ this strategy if you think volatility will be high.” True or False. Why?

Reference no: EM131084389

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